Business Economics, July 2011
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Business Economics (2011) 46, 131–132. doi:10.1057/be.2011.20
From the Editor
Robert T Crow, Editor
The Prospects for the U.S. Economy and Its Major Issues: A View from the Council of Economic Advisers
Austan Goolsbee
Business Economics (2011) 46, 133–138. doi:10.1057/be.2011.11
The U.S. economy is transitioning from a rescue phase to a recovery phase. It is easy to forget the depth of the crisis that required the rescue and easy to be impatient about the recovery. So far, the recovery has the hallmarks of a traditional recovery led by exports, fixed investment, and innovation. Issues of the federal deficit and debt loom over long-term prospects, however. Nonetheless, it should be kept in mind that the deficits are largely a product of the deep and prolonged economic slump and would diminish as a share of GDP as the economy grows stronger. This does not, however, mitigate the need to take serious action on reducing the structural deficit in a way that has bipartisan support and is smart in preserving the conditions for economic growth and fairness. Other concerns, such as oil prices, financial conditions in Europe, and the housing market must continue to be monitored and addressed.
Presented at the 27th Annual NABE Economic Policy Conference, March 8, 2011.
Keywords: U.S. economy; recovery; fiscal policy; federal deficit; Okun's Law
Four Observations about the Federal Budget
Douglas W Elmendorf
Bus Econ 46: 139-143; doi:10.1057/be.2011.19
Four observations on the current and future federal budget are presented and discussed. These are (1) resumption of healthy economic growth will not be enough to close the gap between expenditures and revenues, (2) closing the gap will require significant changes in expenditures and/or revenues, (3) the pace of closing the gap involves difficult trade-offs, and (4) there is no shortage of feasible proposals for putting fiscal policy on a sustainable path.
These comments were presented at the March 7, 2011, Economic Policy Conference of the National Association for Business Economics. The numbers have been changed slightly from that presentation to reflect CBO's updated projections released on March 18, 2011 [Congressional Budget Office 2011].
Keywords: federal budget; fiscal policy; federal revenues; federal expenditures; federal deficits
World War II to 2011: Changes and Challenges in the Global Economy
Robert Hormats and Ariel M Ratner
Bus Econ 46: 144-153; doi:10.1057/be.2011.18
This paper discusses six major changes and challenges that have emerged since World War II that will shape the global economy for the indefinite future. These are the changing economic role of women, the emergence of the global economic and financial system, the re-emergence of state-supported enterprises, the impact of the Internet, the global diffusion of opportunity and innovation, and globalization as an opportunity and a threat. How these challenges are addressed will have important consequences for business and for public policy. In addition to the prepared remarks, this paper also has a summary of the question-and-answer session that followed Dr. Hormats’ address.
This paper is based on an address delivered by Robert Hormats at the NABE Policy Conference, March 8, 2011.
Keywords: international economics; globalization; economic role of women; state-supported enterprises; economic impact of the Internet
Can the United States Transform Itself Into an Exporting Juggernaut?
C Fred Bergsten
Bus Econ 46: 154-158; doi:10.1057/be.2011.13
The United States is capable of becoming an exporting juggernaut if it follows the right policies. This paper discusses what goals the United States should pursue and how it should go about reaching them. The goals should be ambitious—more ambitious than current policy suggests. Gross exports should increase to about 20 percent of GDP, whereas the current account deficit should decline to about 2 percent. The most important instruments to achieve these goals are liberalization of export controls, aggressive pursuit of trade agreements, and exchange rate correction—particularly with China. The paper gives estimates of what can be achieved by these instruments.
Remarks presented at the 27th Annual NABE Economic Policy Conference, March 7, 2011.
Keywords: trade policy; export growth; current account; exchange rates
Will the Health Care Cost Curve be Bent? Where We Stand at the Start of 2011
Charles S Roehrig
Bus Econ 46: 159-162; doi:10.1057/be.2011.14
This overview shows the change in health care costs in the aggregate, as a share of GDP, and—along with other programs—the share of entitlements in the federal budget. These trends are unsustainable. Many current proposals for reform imply a one-time downward shift in the curve but do not affect its long-run shape. Thus, they simply postpone consequences for a few years rather than solve the main problem. What must be done is to bend the health care cost curve so that its rate of growth is more in line with that of GDP.
This paper is based on a presentation made at the 27th Annual National Association for Business Economics Economic Policy Conference on March 7, 2011 (revised and updated March 31, 2011).
Keywords: health care cost growth; federal budget; health care share
Ford Motor Company's Global Electrification Strategy
Ellen Hughes-Cromwick
Bus Econ 46: 167-170; doi:10.1057/be.2011.10
Ford Motor Company has developed global platforms for its vehicles, including hybrid electric vehicles and forthcoming battery-electric and plug-in hybrids. Providing electrification technologies is a key element of Ford's broader strategy of producing vehicles that have improved fuel economy and reduced greenhouse emissions. The breadth of this effort—across a range of vehicle types—is unique in the automotive industry. Of particular importance is using the same vehicle platforms for electrified vehicles as for conventionally fueled vehicles in Ford's global strategy. Infrastructure development is a key element in the success of plug-in hybrid and battery electric vehicles. To this end, Ford is developing home-charging systems and communication networks that will enable drivers to find recharging stations.
Keywords: Ford; electric vehicles; global strategy; sustainability
Economic Challenges in the Clean Energy Supply Chain: The Market for Rare Earth Minerals and Other Critical Inputs
Nayantara D Hensel
Bus Econ 46: 171-184; doi:10.1057/be.2011.17
The past few years have witnessed an increased impetus toward renewable energy to replace fossil fuels that has been driven both by environmental and national security concerns. Recent political instability in North Africa and the Middle East has added to concerns about the security of petroleum supplies. Nevertheless, renewable energy technologies are also exposed to supply chain risks for key inputs, especially rare earths, for which China is the dominant supplier. Rising price pressures in the rare earth market, due to increased demand, as well as China's tightening of export quotas, have magnified concerns about the availability of rare earths. This has led countries to develop strategies to find other sources, to substitute other materials, and to recycle. Over the longer term, the viability of the market for rare earths is dependent on the growth in demand for products requiring rare earth, the ability to find alternative supply sources to China, and possibly increased government support.
Keywords: rare earths; clean energy; China; energy security
Book Reviews
Edward Glaeser, Triumph of the City: How Our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier, and Happier Reviewed by John C Goodman |
Tim Harford, Adapt: Why Success Always Starts with Failure Reviewed by Gerald L Musgrave |
